Man pleads guilty, faces jail time and fines in counterfeit IC case
By Suzanne Deffree, Managing Editor, News -- EDN, November 25, 2009
Neil Felahy, one of three California family members that were indicted by the United States Attorney’s Office for trafficking counterfeit ICs to the United States Navy, has pleaded guilty to one count of conspiracy to traffic in counterfeit goods and to defraud the United States and to one count of trafficking in counterfeit goods.
As part of a plea agreement with the United States, Felahy will cooperate with the government.
At sentencing, Felahy faces up to five years incarceration and a fine of $250,000 for the crime of conspiracy, and up to 10 years incarceration and a fine of $2,000,000 for the crime of trafficking in counterfeit goods, according to a statement from the United States Department of Justice. Under US sentencing guidelines, Felahy faces a sentence range of 30 to 51 months, depending on factual issues to be decided later by the sentencing judge. Felahy’s sentencing will likely occur in 2010.
The guilty plea arises after an 11-count indictment was unsealed in early October, charging Newport Coast, Calif, residents Mustafa Abdul Aljaff, his sister, Marwah Felahy, and her husband, Neil Felahy, with conspiracy, trafficking in counterfeit goods or services, and mail fraud, in connection with their sale of counterfeit ICs to the Navy.
According to the indictment, the defendants engaged in the interstate trafficking of counterfeit ICs. The indictment claims the trio acquired counterfeit ICs from supply sources in China, imported them into the United States, and sold them to the public via the Internet. The indictment further claims they obtained trademark-branded ICs then scraped, sanded, or ground off the original markings to remark the devices with another trademark and other markings, falsely indicating that the devices were of a certain brand, newer, higher quality, or were of a certain grade, including military grade. The indictment also claims the defendants harvested dies from ICs and repackaged them to appear new or of a certain brand, higher quality, or a certain grade.
As alleged in the indictment, on March 3, June 26, and July 14, the defendants entered into contracts with the Navy and other government agencies for the sales of ICs. The indictment alleges that on 22 separate occasions the defendants imported into the US from China and Hong Kong, approximately 13,073 ICs bearing counterfeit trademarks, including military-grade markings, valued at approximately $140,835.50. The counterfeit ICs bore the purported trademarks of a number of semiconductor industry companies, including Altera, Analog Devices, Atmel, Intel, National Semiconductor, STMicroelectronics, and VIA Technologies.
“Those who engage in product counterfeiting, particularly of items for use by our armed forces, create a risk to both public safety and national security, and a concomitant harm to the economy and those rights holders whose hard work and ingenuity should be rewarded,” said Acting US Attorney Channing D Phillips in the Department of Justice statement. “This case shows that we will aggressively prosecute those who engage in product counterfeiting and who expose our armed forces and the public to harm.”
The Semiconductor Industry Association, STMicroelectronics, Texas Instruments, Analog Devices, and National Semiconductor were thanked for their cooperation and assistance in the Department of Justice statement.
